“To err is human, but to really foul things up you need a computer,” said Paul R. Ehrlich. Gartner adapted the saying to the enterprise in its “Predicts 2016” report: “through 2018, 90% of organizations will lack a postmodern application integration strategy and execution ability, resulting in integration disorder, greater complexity, and cost.” To put it bluntly, many ERP projects are doomed to fail!
The research and advisory group still offers hope for companies that adopt postmodern ERP: “This new environment promises more business agility, but only if the increased complexity is recognized and addressed.”
We have seen our fair share of complex and challenging projects that have “gone south.” Turning them around and putting them back on the right track is frequently the reason we’re called in. I’d like to share with you some of the lessons we’ve learned to help you avoid the predicted IT armageddon.
First we’ll look at what postmodern ERPs are. Then, we’ll see what can be done during implementation to mitigate the risk of an upcoming catastrophe. Last, I’ll show how the right partner can help your organization avoid a doomsday disaster.
Gartner defines the postmodern ERP as: “a technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing, and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility.”
What strikes me as interesting in this definition is what they’ve missed from it: the deployment options – on-premises or cloud? These considerations are detailed in Gartner’s HOOF Model:
Postmodern ERPs HOOF Model. Source: Gartner
Take a moment to look through this and evaluate where your organization currently sits and where it is heading. With that in mind, let’s look at how to increase the chances for your journey to be successful.
As described above, one of the keys to postmodern ERPs is the integration of applications provided by diverse vendors, moving away from “monolith mega-suites.” By contrast, best-of-breed applications have a tendency to support integration only with their own tools. For instance, some cloud applications deliver a long list of interfaces (APIs) to interact with their solution, but are limited to read-only interactions. This means that the application will most likely not be able to be integrated into new automated business processes.
In order to help break your corporate silos, you need to avoid recreating them with software. This requires a shift in the mindset from “module” software (CRM, finance, procurement), to a process platform focusing on end-to-end business scenarios.
- Replace “CRM” with “Order to Cash” or “Quote to Cash” processing
- Replace “Procurement” with “Procure to Pay”
- Replace “Asset Management” with “Acquire to Retire”
- Replace “CAD” with “Idea to Offering”
- Replace “Analytics” with “Record-to-Report”
This will ensure a seamless experience for the end users and simplify your application landscape.
The cloud ERP landscape is still heterogeneous. A large number of solutions grew from a specialized scope and expanded into the ERP domain, or from small target customers to larger ones. However, unless a large scope is covered, including Gartner’s main topics – finance, HR, purchasing, and distribution – then integration is increasingly complex and hard to maintain.
As an example, if a professional services company uses an accounting software as its main system of record and combines it with a time and expenses package as well as a payroll solution, some key architecture decisions need to be considered:
- Where should employee master data be maintained?
- How should you handle errors and corrections of time entries?
- How should workflows and approvals be handled?
Without an out-of-the-box integration, these simple questions could easily give nightmares to the most seasoned IT teams.
Software vendors are now expected to have a cloud option. However, some took shortcuts by simply hosting their solutions, providing remote access, and changing their licenses to a subscription model.
This “cloud washing” is far from the postmodern ERP definition we saw earlier. Robust solutions should offer:
- Browser-based solutions (no download)
- Similar user experience across different devices (with responsive design for smaller screens)
- Multi-tenant or elastic options for improved total cost of ownership (TCO)
Postmodern ERPs should have a cloud-first principle with a consistent strategy for back-end and user experience. Ensure you identify such key differentiators when selecting your solution.
Misalignment to your corporate strategy
“Good ERP is more than just good software. It involves an institutional commitment to connecting people, processes, and resources,” said James Young. We’ve seen countless software purchase decisions that made sense at the level of cost center manager or for a small business unit, but were counterproductive to the overall company-wide strategy.
On a recent project, the CIO of a large company told us, “for security and legal reasons, we have a zero-cloud policy.” However, during the subsequent roadmap analysis, we uncovered a slew of critical Web applications for CRM, human resources, and reporting, unbeknown to him.
Another mistake is to align your IT strategy with a vendor roadmap. On our last roadmap exercise for a multinational consumer products manufacturing company, our analysis concluded that there wasn’t enough value in its main software provider’s current release, and that a better strategy would be to leapfrog this release in 2016 and implement the next major release in 2017, thus reducing the impact of change and improving the chances of value realization.
Go at it alone
As the Gartner report concludes: “It really is time that the significant investments enterprises make in ERP solutions reap real benefits. ERP vendors and [software integrators) must raise their game on implementation approaches, renovating and revisiting their own implementation methodologies for speed and with greater emphasis on the benefits realization activities.”
But let’s face it: simple just ain’t easy! Despite efforts from ERP vendors to facilitate the onboarding of new teams and the standardization of the connectivity of their applications, the integration piece still needs expertise on both applications. Such skills are usually few and far between but are critical to the success of your project.
So, if your future postmodern ERP implementation project becomes scary, “if there’s something weird, And it don’t look good, Who you gonna call?”
To create a Live Business, check out this infographic to learn The Essentials of Process Digitization Excellence.